In the literature on open-economy macroeconomic models there exist many models of a purported ‘Keynesian’ nature. The Keynesian characteristics of such models are often limited to including the possibility of a short-run unemployment situation. These models invariably fail to capture the full richness of Keynes’ general theory because they do not make use of Keynes’ own aggregate supply and demand model. Consequently, standard interpretations of Keynes’ general theory do not recognize that his model:
1 has a complete supply side that is fully capable of incorporating alternative technology, cost, and firm structure considerations;
2 can include short-term and long-term expectational elements, including user cost considerations;
3 includes a theory of aggregate price determination and inflation; 4 incorporates a complete theory of income distribution that is social in nature
and rejects the neoclassical technology and thrift view of income distribution; and
5 provides the foundation for a comprehensive theory of long-term dynamics and economic growth.